Service Tax - OIDAR

[Rohit Kapoor]

Dear Sir,

With regard to the above mentioned subject; I would like to have the clarity on invoices that are issued prior to 1 December 2016 but not paid till 1 December 2016. Please note that the services/provision of services has already been made available from the date of invoices for the copyright content through its portal. The access in these might or might not have been completed/closed till 1 December 2016 and could have been continued post 1 December 2016.

To give you a little background, we are in the business of books and journals in electronic medium through IP access. The access continues for a subscription period (in some cases beyond for perpetual access), subscribed by the customer. In simple words, the access is given and it depends on the customer whether they use it or not? It means that we have made provision for service that can be availed by the customer.

[KASTURI SETHI]

 

Dear Querist,

Go through the following:-

POINT OF TAXATION RULES, 2011

Rule 4. Determination of point of taxation in case of [change in effective rate of tax]. - Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a [change in effective rate of tax] in respect of a service, shall be determined in the following manner, namely :-

(a) in case a taxable service has been provided before the [change in effective rate of tax],-

(i) where the invoice for the same has been issued and the payment received after the [change in effective rate of tax], the point of taxation shall be date of payment or issuing of invoice, whichever is earlier; or

(ii) where the invoice has also been issued prior to [change in effective rate of tax] but the payment is received after the [change in effective rate of tax], the point of taxation shall be the date of issuing of invoice; or

(iii) where the payment is also received before the [change in effective rate of tax], but the invoice for the same has been issued after the [change in effective rate of tax], the point of taxation shall be the date of payment;

Also go through Serial No.41 of Board's circular no.202/12/2016-ST dated 9.11.16

AI Summary

Point of taxation for change in effective tax rate: timing of invoice versus payment determines the taxable point. Point of taxation where there is a change in effective rate is determined by invoice and payment timing: if both invoice and payment occur after the change the point is the earlier of payment or invoice; if invoice issued before the change but payment after, the point is the invoice date; if payment before but invoice after, the point is the payment date. This applies to services provided before the change, including pre-existing electronic access subscriptions, with Board circular guidance referenced.